Which of the following is more likely to have perfectly elastic or nearly perfectly elastic demand?
A) a textbook required for an economics course
B) the guitar produced by a master craftsman
C) cotton produced by a Texas farmer
D) the services offered by the only allergist in the community
Answer: C
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In building an economic model, variables that are taken as given are referred to as ________ variables
A) exogenous B) endogenous C) concrete D) presumptive
The money multiplier can be as ________ as the reciprocal of the reserve ratio but is usually ________.
A. high; lower B. high; constant C. low; constant D. low; higher
An efficient economy is one that
What will be an ideal response?
Answer the following statements true (T) or false (F)
1. When the Fed sells government securities in the open market, its intent is to try to increase aggregate demand. 2. An expansionary monetary policy increases the money supply, lowers interest rates, and increases aggregate demand. 3. If the monetary authority wishes to rein in inflation, it would buy government securities in the open market. 4. In order to stimulate the economy and reduce unemployment, the Fed will set a lower target for the federal funds rate. 5. In the cause-effect chain of monetary policy an autonomous increase in investment spending when the economy is at full employment will cause the Fed to seek a lower target for the federal funds rate by buying securities in the open market.